401(k) changes that can make a difference

Gone are the days of the pension, and many in recent years have found 401(k) employer matches hard to come by. Fortunately, most companies that were forced to suspend their 401(k) matches during the recession have now restored them.

According to a Towers Watson survey, 75 percent of 260 companies that suspended or reduced their match in January 2008 or later, have reinstated their employee retirement savings plan matches. The reinstatements primarily took place in January 2010 and January 2011, and this trend is expected to continue in 2012.

Most companies switched in the early '90s from pension plans to 401(k) plans, where the employer has the option to match a percentage of the contributions to the plan. Employees then have the option of choosing how much they would like to contribute to their 401(k) plan.

Of course the ultimate goal for employees would be to contribute the annual maximum amount allowed by the Internal Revenue Service. For 2012, contribution limits for 401(k)s will increase to $17,000, up from $16,500 in 2011, according to the IRS. Catch-up contribution limits for those age 50 and over will remain $5,500. At a minimum, employees should contribute enough to their 401(k) to receive their employer's match.

401(k) plans are generally more secure than pension plans and have more rollover options. A 401(k) is just one of the many keystones to supporting your retirement plan. When was the last time you reexamined your 401(k) to determine if it's sturdy enough to help support your retirement goals? Are you contributing the maximum, or at least meeting your employer's match? We can assist you in evaluating your 401(k) to make sure. Call today and let us help you solidify the foundation for a strong retirement plan.